Indian startup space sets a blistering pace in 2018, as investments pour in

Ecosystem secures $1.8 billion in just 40 days, foodtech leads the way.

The Indian startup ecosystem has secured a staggering $1.8 billion in funding in the first 40 days of this calendar year, in a clear departure from the funding patterns of last year. The amount has been raised over 100 deals.

During the same period last year, the industry was struggling. At this point in 2017, the startup sector had gathered only $810 million in 97 deals.

So what has changed?

India is probably eating better! That’s why! The country’s food-tech space seems to be especially hungry. While Swiggy has pocketed $100 million in a round led by Naspers last week, Zomato had done better by getting Alibaba to infuse $200 million through Ant Financial.

Mohandas Pai, founder of Aarin Capital and former Infosys board member, told YourStory that more deals are happening for multiple reasons. “Reasonable valuations have led to better quality deals. Hence more people are interested,” he said.

Last year, the food tech space was not in the best of health and it didn’t look like there would be a recovery soon. Business was on a slippery slope and funding was drying up. But the consolidation in the space has made the investors look at this space again. In fact, Zomato had a tough time in the last 12-18 months prior to the fund raise. Its financial constraints had forced it to tone down ambitions but now with Alibaba in its camp, it can fly again. Swiggy too, which has now raised funds twice in the last eight months, has gained back some muscle to stand its ground in the fight.

Year 2017 had seen $14 billion being raised across 876 deals, moving up substantially from $4 billion in 2016. So the momentum was good last year, yet the pace set in the first few weeks of this year has been unprecedented, and is looking good for more.

Consulting firm Redseer in its recent report had said that the food delivery sector, currently valued at $750 million, would become a $1.5 billion industry by the end of the year. The food-tech sector is growing at 15 percent sequentially and that has got the investors interested again.

The rest of the industry too is beginning to catch fire. Edtech startup CollegeDekho has raised $2 million, though a relatively small amount, in a round led by Girnarsoft.

If this continues, the year could see investments topping $20 billion. And what better news for an ecosystem, that hasn’t seen cash on the table for some time?

Bring it on.